I’ve been speculating for the past few months — not with stocks or bonds, not with gold or guns but with a projection for the remodeling industry. Make that “my remodeling industry”. There are many remodelers who fly ‘under the radar’ and with whom I have little or no contact – they don’t join the groups I join: Remodelers Advantage, NARI, NAHB, NKBA or the much-loved Splinter Group in Berkeley, CA. They don’t attend the trade shows I speak at or attend: JLC, The Remodeling Show. And except for the remarkably active blogs on The Journal of Light Construction website, they don’t comment much on the blogs I write – either this one or that of Remodeling Magazine. In a word, we don’t know one another. So these aren’t members of “my remodeling industry”.
Members of “my remodeling industry” (and remember this is an industry made up of many, many members each of which – even the largest – accounts for a very small % of total overall remodeling $ spent in their marketplace) tend to be interested in running a full-blown stage 3 (at least) business as opposed to a craftsman shop, they’re primarily selling and managing the company, they know their numbers pretty well and they usually have an office outside the home. Many of them have been quoted in Remodeling Magazine and a goodly number have been well-photographed on the magazine’s cover.
And many of these great people are in trouble, trouble I don’t even know about because we haven’t talked for a few months. But I can tell you this, they’re not spending money with me. My business has declined 33% for the first three months of this year over the same time last year. If the recession began in December 2007, most of us didn’t even start to take it seriously till, at best, late spring of 2008. And it wasn’t until September and October of 2008 that many people I know began making the first cuts in personnel. And then we all began to draw up new year budgets with significant cuts in overhead.
When I told my good friend and remodeling consultant, David Gerstel (author of the great book “Running a Successful Construction Company” published by Taunton Press in 2002) that I was hard at work on an A/B/C budget accounting for a 20%/30% and 40% decline in revenue, he asked if I had prepared the “H” budget – “H” for “when hell freezes over.”
I hadn’t at that time but I have now. If my business has declined 33% already, I don’t know where it’s going for the rest of the year and I am hard at work on that “H” budget.
This is what it means for me:
- My already minimal overhead can be decreased a few % points;
- My personal spending can be decreased by 10% relatively easily and by 20% with some attention (I’m planning a ‘stay’ vacation this year exploring my own beautiful backyard of Seattle rather than traveling somewhere exotic – like Mexico).
Add this to an increase in marketing energy I’ve written and will send 12 letters to high-end remodelers in the Seattle area who I don’t yet know but who work in my neighborhood indicating my interest and availability in helping them get through this recession. I’m also sending out letters to CPA firms asking for full-time, part-time work in construction accounting, client work-ups and budgeting. In short, I’m turning up the dirt in new areas of my new city looking for new introductions, new conversations and the ability to help new people.
So I’m feeling better about the next 6 months. However, I’m not/we’re not out of the woods yet – no matter what happened last week in the stock market.
So make that budget, that “H” budget, then put it in a drawer but know you’ve faced the tougest test – what will I do if the unthinkable happens — if my business drops significantly more than originally anticipated. I haven’t yet hit that 40% drop but because 33% is not that far away from 40%, now is the time to exert extra energy, focused attention to the task.
Good luck to us all.
PS: I’d be very interested in how your business is faring. I’d be glad to start a chart tracking the changes in volume of anonymous remodeling companies for 2009, Quarter by Quarter. Please send yours to jfmiller@remodelservices.com. I promise confidentiality. Thanks.